Writing in the Wall Street Journal, Rochelle Toplensky warns that EU/U.S. trade tensions may soon be on the rise again:

It can be easy to grow complacent about a small but steady drip, but if it continues for too long, at some point the dam gives way.

The European Union is intensifying its long-running crackdown on U.S. tech giants. That increases the risk that an uneasy trans-Atlantic tax truce could soon come to an end. Investors may be wise to brace for a hit.

Toplensky notes that “European officials insist their actions are distinct, law-based efforts that aren’t part of a coordinated attack on U.S. tech,” but:

From across the pond, however, these efforts—enacted by many different officials, departments and even countries throughout Europe—tend to blur together into what looks like a concerted campaign against a successful U.S. industry. And there is some evidence to support that perspective.

Late last year, the new European Commission outlined two primary priorities for the next five years—green and digital. It has revived industrial policy to level the corporate playing field, particularly with China, and help European companies to compete globally. Margrethe Vestager, the tough antitrust enforcer from the last commission, was reappointed to an expanded role and is seeking new powers and regulations that could delve deep into tech platforms’ business models.

To describe Vestager as a “tough antitrust enforcer” is too kind. In reality, she is a tough mercantilist, looking to reinforce the EU’s long-floundering attempts to plan its way to parity with U.S. tech, an effort that has been going on for a long, long time.

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Who can forget the launch in 2000 of the EU’s Lisbon strategy?

The Union has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.

That strategy ended up, as it was always going to do, in failure, thus the harder line taken by Vestager against American companies that have had the effrontery to do well, a strategy that also included attacking Ireland for setting its taxes too low (“unfair competition”) in a successful attempt to attract investment from the likes of Apple. The latter line of attack has just suffered a major setback in the European Court of Justice. The verdict can be appealed, however, and, given the influence of both the tax cartel and the EU’s mercantilists, could well be.

Toplensky:

Losing the tax cases is unlikely to stop the commission’s efforts. It might instead revive efforts to create an EU-wide DST, particularly if the Organization for Economic Cooperation and Development fails in its efforts to reform digital tax by the end of the year.

U.S. politicians from both political parties support retaliatory tariffs against Europe. The USTR seemed to de-escalate earlier this month when it said it would apply a 25% levy on French goods from January if Paris applied its 3% DST, much less than the 100% tariff Washington threatened last December. Investors in French luxury companies shrugged off the announcement, maybe relieved at the lower rate or possibly counting on their Chinese customers to carry them through. Car makers and industrial companies might be less sanguine.

Meanwhile I couldn’t help noticing this tiny detail in the EU’s stimulus package (via Bloomberg, my emphasis added):

In order to defray the cost of the program, the bloc will increase the amount of revenue it can collect. A new tax on non-recycled plastic waste will be introduced next year, and the European Commission is preparing proposals on a digital tax and a carbon border adjustment mechanism that would take effect in 2023.

Trouble ahead, I reckon.